Wiley's Wire Products is considering a project that has the following cash flow and WACC data.What is the project's MIRR? Note that a project's MIRR can be less than the WACC (and even negative),in which case it will be rejected. $$\begin{array} { l c c c c }
\text { WACC: } & 11.00 \% & & & \
\text { Year } & 0 & 1 & 2 & 3 \
\text { Cash flows } & - \$ 800 & \$ 350 & \$ 350 & \$ 350
\end{array}$$
A) 8.86%
B) 9.84%
C) 10.94%
D) 12.15%
E) 13.50%

Question

Wiley's Wire Products is considering a project that has the following cash flow and WACC data.What is the project's MIRR? Note that a project's MIRR can be less than the WACC (and even negative),in which case it will be rejected. $$\begin{array} { l c c c c } 
\text { WACC: } & 11.00 \% & & & \
\text { Year } & 0 & 1 & 2 & 3 \
\text { Cash flows } & - \$ 800 & \$ 350 & \$ 350 & \$ 350
\end{array}$$
A) 8.86%
B) 9.84%
C) 10.94%
D) 12.15%
E) 13.50%

Quizplus · Accepted Answer

$\begin{array}{lcccc}
\text { TACC: } & 11.00 \% & & \
\text { Year } & 0 & 1 & 2 & 3 \
\text { Cash flows } & -\$ 800 & \$ 350 & \$ 350 & \$ 350\
\text { Compounded values FVs} && -\$ 43124  & \$ 388.50 & \$ 35000 
\end{array}$ 
TV = Sum of compounded inflows: $1,169.74
 $\begin{array}{ll}
\text { MIRR }=13.50 \% & \text { Found as discount rate that equates PV of TV to cost, discounted back 3 years @, WACC } \
\text { MIRR }=13.50 \% &  \text { Alternative calculation, using Excel's MIRR function } \
\end{array}$

Wiley's Wire Products Is Considering a Project That Has the Following